Interactive Investor

Market snapshot: the catalysts driving stocks higher right now

19th April 2021 08:08

Richard Hunter from interactive investor

The stars have aligned for equity markets as economies emerge from the Covid crisis.

Investors are feeling the sugar rush as the effects of major stimulus packages begin to translate into increasing evidence of a strong economic rebound. 

In the US, the most recent data has reflected this impact, with robust showings from housing, retail sales and an improvement in the jobless claims number.

Meanwhile, the US banks have also reported significant profit hikes, reinforcing hopes that the recovery is firmly on track. Corporate earnings will continue to be a near term feature of investor scrutiny, with the likes of Netflix Inc (NASDAQ:NFLX) and IBM (NYSE:IBM) reporting this week.

From a broader perspective, accommodative monetary and fiscal policies are expected to remain in place which, coupled with the ongoing global vaccine rollout, provide a firm foundations for equities. Both the Dow Jones and S&P500 again closed at record highs and are ahead by 11.7% and 11.4% respectively in the year to date, with the Nasdaq also showing gains of 9% so far this year.

The UK is also receiving renewed investor attention, as a successful vaccine rollout and resilient economic readings combine with improved sentiment following the next stage of the gradual release from lockdown.

Long since an investment pariah in global terms, the beaten down indices have seen the benefit of buying interest based on a valuation gap compared to many global markets, while the cyclical nature of the UK indices is also expected to feel the force of a pronounced economic recovery.

As a result, the FTSE 100 has regained its level above 7,000, with the index now ahead by 8.6% in the year to date.

For the more domestically focussed FTSE 250, the positive shift in sentiment is even more evident with the index closing at another record high, representing a jump of 10% so far this year and of 73% since the lows of March 2020.

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